The company has a $6.1 Billion credit facility from a consortium of banks, of which $150M is from Lehman. That would be under 2.5% exposure to Lehman on the debt side. That appears to be enough to drive the stock down 60% and have it halted at 2 PM. This is the legacy of no uptick rule, computer dominated trading dominance, and unrelenting selling pressure. This is no different than financials - buy a bunch of credit default swaps, while shorting the stock - point everyone to the huge jump in credit default cost and say "game over" and everyone jumps in with you in the "shoot first, ask questions never" market. Now it can be done in any industry it appears - even boring utilities - as long as you know someone needs to liquidate a position. Just another day in the office for the hedgies. Lehman owned a 5.4% stake in the company and hedgies knowing they have to liquidate it can target at will. What a joke this market has become... I can only imagine what the poor workers and 401k holders of company stock must be going through right now - stocks are just playthings nowadays.
- Constellation, Baltimore’s corporate cornerstone, saw its stock plummet as much as 63 percent despite its move to quell fears that its financial ties to Lehman Brothers would not have a negative impact on the company. Constellation revealed in an SEC filing Monday that it has $6.13 billion in a credit facility from a consortium of banks, with $150 million of that total coming from Lehman Brothers Bank. The company said the Lehman bankruptcy would have no material impact on its operations
- In a Securities & Exchange filing dated Monday, Constellation Energy Group said it did not see a "material effect" from Lehman exposure. Constellation Commodities is a counterparty with two Lehman Brothers subsidiaries that deal in commodities transactions. The obligations of Lehman Commodity Services and Eagle Energy are guaranteed by Lehman, and the Lehman bankruptcy filing gives Constellation Commodities the right to terminate the transactions, according to the filing.
Long Constellation Energy in fund and personal account
3 comments:
Not really related to CEG, but it is related to CGMFX, which you have mentioened in the past ... Keep up the good work. jegan
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http://www.247wallst.com/2008/09/ken-heebner-bai.html
In a CNBC interview with Erin Burnett, Heenber was asked about his positions in two key stocks in the oil sector Schlumberger (NYSE: SLB) and Petroleo Brasileiro (NYSE: PBR), or Petrobras. Heebner said that because of the slowing in emerging growth markets such as China and India, HE HAS CUT COMMODITY STOCKS DOWN TO UNDER 10% OF THE PORTFOLIO.
Yep, I think he did that about 3-4 weeks ago based on the funds changes in direction. If he doesnt change his holding another 90% in the next 2 weeks we'll have a good idea of what he moved into. My guess is housing stocks and retail.
Why do I say that? because when important people buy stuff everyone on the Street knows from the traders who manage the trades "pssst, hey Heebner is loading up on Pulte Homes - pass it on"
And what has the most relative strength of late??
I am curious to see if he bought an airline!
We'll know mid October.
I only have a slightly larger commodity exposure myself at this point but I do think there will be some nice runs from oversold conditions along the way- which mostly need to be sold (outside agriculture it seems)
Then in 12-15 months we can pile back in on the "global growth is back in 6 months" trade.
I saw the "no material effect" comment also and bought CEG on 9/16 at 35 based on that comment.
If there was "no material effect", why do they sell the next day for $26?
Seems wrong to me.
adagiopop@yahoo.com
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